The Tribune

• Judge grants move after vicious $34m legal battle

• ‘Smear’ attempts embroiled Leon Griffin’s business

• Tax evasion, ‘siphoning off sales’ allegations fly

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Receivers have taken over the luxury goods retail group headed by an ex-PLP Cabinet minister’s murdered husband in a bid to resolve a bitter $34m legal dispute.

Damian Gomez QC yesterday confirmed to Tribune Business that the Supreme Court had approved accountants Michael Hepburn and Richard Simms to act as joint receivers and managers for the late Leon Griffin’s Treasures Bahamas group and its eight stores.

The former minister of state for legal affairs, who is acting for a US-based luxury goods supplier in its acrimonious court battle with Mr Griffin’s business interests, said the duo have been charged with continuing to run Treasures Bahamas’ operations - including the outlet that the Prime Minister broke his “voluntary” quarantine to buy Christmas presents from - as a going concern.

And they will also review the group’s financial records, and perform an accounting, to determine the validity of multiple competing claims of who owes what to whom, and how much. Mr Gomez said Messrs Hepburn and Simms are due to produce a report on their findings “in about three months.”

He spoke after Justice Loren Klein, in a January 28, 2022, ruling confirmed that he had “granted” permission for the joint receivers and managers’ appointment after it was either agreed “or not opposed” by legal representatives acting for all parties following Mr Griffin’s December 23, 2021, murder.

The judge also refused to grant an injunction sought by Mr Gomez’s client, Satish Daryanani, principal of Miami-based Sovereign Jewelry, who had been seeking a Supreme Court order barring Treasures Bahamas and its franchisor from selling any “unsold goods” he has supplied as well as requiring them to return all product that was unsold as at January 15, 2021, last year.

Justice Klein found that Treasures Bahamas was “more at risk of suffering irreparable damage to their business goodwill and reputation” if he granted the injunction, with this greater than the harm likely to be suffered by Mr Daryanani and his business if the application was refused.

In particular, the judge said Treasures Bahamas’ “ability to remain viable” could be impacted if it was blocked from selling the luxury goods provided by the US-based supplier, whose products accounted for around 30-35 percent of the group’s inventory (there were 12 other suppliers). And this, in turn, could endanger the more than 100 jobs provided by the retailer.

Mr Daryanani did not respond to Tribune Business calls and messages seeking comment yesterday, but Mr Gomez said the agreement to appoint the receiver/managers meant that Justice Klein’s ruling had been overtaken by events and effectively rendered academic.

He added that Mr Daryanani had also been permitted to enter the Treasures Bahamas’ stores and do an inventory count of the goods supplied by the latter, as well as inspect the group’s sales records - a key demand he had been making.

Justice Klein, in his judgment, branded the appointment of the receiver/managers as “an auspicious development” given that he had been informed this could help “resolve many of the outstanding issues between the parties” following heated litigation.

He recalled how all sides had sought to “smear” each other via their court filings with allegations, and counter-charges, involving claims of illegally evading Bahamian taxes, “commercial sabotage”, “sharp business practices”, and assertions that one party was ‘double dealing’ and “playing both sides of the fence”.

Mr Daryanani, in initiating legal action, sought a Supreme Court order to block Mr Griffin, Treasures Bahamas and their franchisor partner from “selling” or disposing of $23m worth of goods he had supplied. He claimed they had failed to pay him a single cent of what they owe on high-end jewellery products and loans since the COVID-19 pandemic began in March 2020.

The Sovereign Jewelery chief alleged Mr Griffin, former Bahamas Taxi Cab Union president and husband of ex-Cabinet minister, Melanie Griffin, together with the Treasures International LLC franchisor, had breached an October 2, 2019, agreement governing their three-way relationship and the supply of luxury goods on consignment to the Bahamian retailer.

Consignment goods are products supplied to a third-party that is authorised to sell them. The ownership and title in such goods, though, vests in a consignor or supplier such as Mr Daryanani until such time as they are sold by the third-party retailer, in this case Treasures Bahamas, whereupon the two parties divide the proceeds between each other.

However, the Sovereign Jewelery boss claimed Mr Griffin’s retail group breached the October 2, 2019, agreement by failing to appoint him as a director of the various companies, give him access to its bank accounts and stores, and failing to repay due debts.

He also alleged that the Treasures International franchisor, together with its two principals, Jitendra Keswani and Raj Chandiramani, failed to repay a $7.5m loan based on the “goodwill” built up in the two Treasures Bahamas’ luxury goods stores they operated on Mr Griffin’s behalf - the Parklane Lux on Bay Street and the Parklane Marina in the Atlantis Marina.

As a result, Mr Daryanani made a separate $15m claim against Messrs Keswani and Chandiramani in the same action. Other stores in the Treasures Bahamas group include the Diamond Centre, Pink Flamingo, Bahama T-Shirt Company, Bahama Mama and Baker Estate in downtown Nassau, and Bamboo Nation on Paradise Island.

This was met with a venomous response by Mr Griffin, who accused his supplier of “engaging in various unsavoury business practices and underhanded dealings”.

Mr Griffin alleged that he and his “consultant” Biswajit Pati, an accountant who was himself murdered just four months before the Treasures Bahamas chief, had “great concern” that Mr Daryanani was under-valuing invoices related to the goods he was supplying and thus evading Bahamas Customs duties and other import-related taxes.

Suggesting that he told Mr Daryanani “in no uncertain terms that I do not condone such actions”, Mr Griffin alleged: “I later discovered that the invoices that the plaintiff forwarded to all of us for inventory were prepared in such a way that they raised the suspicion of the Bahamas Customs Department, which resulted in delays in clearing inventory from the port.

“I and the other defendants were so concerned about the fact that the plaintiff seemed to engage in falsely undervaluing imported goods that we insisted that the plaintiff sign an affidavit and an addendum to the October 2019 agreement undertaking that he would produce a true inventory of goods being imported for my businesses.”

That “addendum”, which was executed on March 12, 2020, mandated that Mr Daryanani, his wife and their employees “shall forever and henceforth make a true and correct declaration to the Bahamas Customs Department, the US Customs Department and any other governmental border agency relevant to the exportation and importation of any and all the said products”.

However, Mr Daryanani “denied the allegations that he participated in evading taxes or falsifying invoices, and indicates that he only swore the affidavit and the addendum to the contract because of ‘What’sApp’ text messages from the defendants that they would stop paying monies unless he swore the affidavit”.

He then produced evidence showing that Mr Keswani was caught by Bahamas Customs trying to smuggle jewellery and other luxury goods into the country, and that he and Mr Chandiramani had also been penalised and fined by US Customs for similar offences.

But Mr Griffin, in a subsequent affidavit filed on January 4, 2021, further claimed: “We have subsequently discovered that the invoices the plaintiff provided to us were different from the invoices he had provided to the Customs Department of the Bahamas to clear the goods upon entry, and the invoices that he had received from his suppliers of the jewellery, which would normally be made to Parklane Jewellers.”

Justice Klein’s verdict noted exhibits showing that one item, a necklace, was valued at $19,000 on the invoice submitted to Mr Griffin and Treasures Bahamas, yet was pegged at $4,750 on the paperwork submitted to Bahamas Customs - a difference of more than $15,000.

The judge declined to pronounce on the tax evasion claims, although he acknowledged that Mr Griffin and Treasures Bahamas “made heavy weather of the allegation that the plaintiff’s inclination to falsify invoices in respect of imported goods led to the necessity to add a March 2020 addendum to the agreement, which was intended to protect the defendants.

“The defendants are right to point out that the collateral agreement contains terms which are most unusual to find in a commercial agreement, as they appear tantamount to an admission that goods had been falsely invoiced.”

Justice Klein agreed that phony, under-valued invoicing would be would be “reprehensible” if it had occurred, “and perhaps a matter for national authorities”, but declined to pronounce further.

However, a fresh storm of allegations was triggered when Mr Keswani broke ranks with his fellow defendants, and performed an “180 degree turn”, by siding with Mr Daryanani and admitting that he and Treasures International owed the latter almost $34m.

Mr Chandiramani countered, saying he was “shocked” by his colleague’s admission as this contradicted evidence he had given in a connected case before the southern New York federal court. He alleged: “Since the filing of these proceedings, it was discovered that Mr. Keswani was selling inventory of jewelry and not accounting for the sales.

“An audit/investigation is being conducted by Baker Tilly Gomez to determine the extent of those ‘sales’. It is projected that hundreds of thousands of dollars of sales were conducted by Mr Keswani with no accounting to Treasures Bahamas. Occasioned by this conduct, Mr. Keswani was terminated from his position on July 30, 2021.”

Mr Griffin accused Mr Keswani of “playing both sides” in the dispute, and claimed he had “made multiple payments to unknown vendors and allowed cash expenses without trace or records”.

“Mr Keswani is known to hide from vendors and creditors via phone, e-mails or personally,” he added. “He has made multiple commitments and duped the vendors to supply merchandise, but he runs away from the obligation when it comes to payment, dumping the liability on me.

“This has been his modus operandi since he started working in the Bahamas in 2009. He has done it with many Bahamian people and American vendors. Mr. Keswani claims to have knowledge of over millions of dollars in sales but he has not considered that I have expenses to run my operations as well as employees and severances, and other Government obligations that need to be paid.

“Mr Keswani has siphoned funds using a USA system to charge customers and move inventory out of The Bahamas to his own company. There are many other ways he has moved funds....”

Justice Klein also noted that there were two other Supreme Court disputes connected to the parties involved in the matter before him. One involved a Treasures Bahamas affiliate obtaining an injunction against Sir Garet ‘Tiger’ Finlayson, and his family’s Dove Properties vehicle, to enable it “retrieve several million dollars’ worth of jewellery” from a warehouse after the landlord locked it out.

And a former Treasures Bahamas employee, in an unfair dismissal claim, had seized jewellery worth more than $500,000 from the Parklane Lux after obtaining a $98,000 default judgment against the company. Justice Klein subsequently set aside the default judgment and ordered the jewellery’s return.

Noting that some of the evidence given by the parties was contradictory, Justice Klein describing this as “chinks” in the case presented by both sides, he also ruled that there was sufficient material for the substantive issues to go to trial if it ever reaches that stage.